VA home loans have very specific eligibility requirements. Guidelines are set for active duty, members of the Guard and Reserve, current and former, and eligible military spouses. The VA eligibility requirements are as follows:
- Active duty: A Certificate of Eligibility (COE) is required and verifies to the lender that you are eligible for a VA backed loan.
- Current statement of service (a) signed by the adjutant, personnel office, or commander of the unit or higher headquarters; (b) showing your full name, social security number, date of birth, entry date on active duty, duration of any lost time, the name of the command providing the information.
- Current or former National Guard or Reserve member, activated for Federal active service: DD Form 214 is required. A copy showing the character of service and the narrative reason for separation.
- Current National Guard or Reserve member, never been activated for Federal active service: Statement of service (a) signed by the adjutant, personnel office, or commander of the unit or higher headquarters; (b) showing your full name, social security number, date of birth, entry date on active duty, duration of any lost time, the name of the command providing the information.
- Discharged member of National Guard, never been activated for Federal active service: (a) NGB Form 22, Report of Separation and Record of Service for each period of National Guard service, or (b) NGB Form 23, Retirement Points Accounting and proof of the character of the service.
- Discharged member of Selected Reserve, never been activated for Federal active service: (a) Copy of the latest annual retirement points statement and (b) evidence of honorable service.
- Surviving spouse of a Service member who died on active duty: If you are already receiving DIC or Dependency and Indemnity Compensation, no other documents are required. If you are not currently receiving DIC: (a) copy of DD Form 1300 (Report of Casualty) from the military, and (b) copy of your marriage certificate. Also, a signed statement stating your intention to apply for DIC. If you qualify and are eligible for a home loan benefit, chances are, you also probably might qualify for monthly payments under Dependency and Indemnity Compensation (DIC).
- Surviving spouse of a veteran who died as a result of military service: If you are receiving DIC or Dependency and Indemnity Compensation, a copy of your award letter is required. This should already be on file with the VA Regional Benefits Office. If you are not currently receiving DIC, you will need (a) copy of the Veteran’s DD Form 214, (b) copy of the Veteran’s death certificate, and (c) copy of your marriage certificate. A signed statement stating you would like to apply for DIC would be sufficient. The probability of qualifying for DIC is highly likely if you can qualify for a home loan benefit.
VA Loan Requirements
As mentioned above, it’s explicitly evident that this loan program is granted only to military members except for a few service member spouses. One of the unique things about this loan program is that the documents that are called for compliance are not the same for every applicant. Meaning to say, what qualifies an applicant to start with is also what sets what files need to be submitted. In other words, National Guards and Reserves don’t have the same paperwork with spouses that make the cut, or anybody who falls under the “has served 90 successive days” category.
At the same time, one thing familiar everyone with a VA home loan will need to submit is a Certificate of Eligibility (COE). A COE I what validates one’s suitability for the loan grant. There are several ways to obtain this, but this shouldn’t be too tedious as one’s lender should assist a borrower in claiming this.
What makes a VA home loan incredibly unique is that, apart from the USDA home loan program, only the VA delivers a down payment pass for its borrowers. In other words, the need to expend a deposit to purchase a home is altogether eliminated. One will need to spend zero dollars in upfront fees to make a purchase. This is a feature that remains to be coveted in the real estate market, but it serves its purpose to aid members of the military to buy homes without demanding them to maintain specific credit scores.
This loan program was created in 1944 to do just that. And as of this writing, over 20 million qualified service members have made use of this loan program to build home equity. What’s more, there is no mortgage insurance and closing costs can be paid for in regular terms, just like with any other mortgage. Moreover, interest rates are also comparatively lower than that from the conventional loans.
Having established all these, qualified VA borrowers are not entirely free from fees. A VA funding fee takes the place of mortgage insurance, but they are not the same. The figure to this fee, just like paperwork, will depend on plenty of factors, but primarily on how a borrower is qualified. How many times they’ve made use of this loan also helps put a price on the funding fee. If one finds that the fee is too big, a loanee may decide to put in a down payment to help lower the cost.
Similar to Federal Housing Administration loans, VA loans are government-insured. The U.S. Department of Veterans Affairs (VA) backs up a mortgage that lending firms extend to its applicants. The VA only serve as guarantors to borrowers that enable them to buy homes, but the money will come from a private lender. The reason for this is so that lenders are protected if a debtor defaults. Government loans, in general, are deemed to be easier to obtain. With that, more people with low to average FICO scores become eligible.
It is both smart and right for an applicant also to be very careful in the selection of his or her house of choice as the VA does not insure the property, only mortgage.
An applicant should still see to it that his or her credit scores are decent enough to lure a lender to collaborate with him or her. One still needs to look for a financial firm willing to vouch for the applicant. For a specific, more detailed list of required documents and other concerns about Eligibility For VA Loans, click the link and reach out to the leading VA home loan lenders.